Quadriga’s Funds Would Have Been Safer in Bermuda
According to the leader of the island nation of Bermuda, Premier David Burt, if QuadrigaCX has been based in their country instead of Canada, the exchange’s private keys would never have been lost.
Safeguards in Place
Over 3 months after major Canadian cryptocurrency exchange’s Chief Executive Officer Gerald Cotten died unexpectedly, authorities are still struggling to recover the funds that were held in cold storage wallets, the private keys of which were only known to Cotten himself.
According to Premier Burt, if QuadrigaCX has been operating under license from the Bermuda Monetary Authority, its cold storage wallets’ private keys would never have been lost. This is because the country has created a framework of rules with regard to the custody of master keys, including ensuring that they are not held by one single individual.
This was a reference to the Digital Asset Business Act that was put into effect in the late summer of 2018. It was a part of a legislative framework that the country had created to encourage the growth of the fintech and cryptocurrency industry in Bermuda.
Premier Burt explained that this framework had a section that dealt with the handling of master keys for cryptocurrency wallets. He stated that the laws outline what needed to be done with such keys, how they needed to be handled and ensuring that they would not be lost. In the event that they were, indeed, lost, then there was also a contingency plan in place to recover the funds.
Encouraging Growth in the Blockchain and Crypto Industry
The Island of Bermuda is one of the countries known for its pro-crypto and Blockchain stance. So far, 74 fintech and Blockchain companies have been allowed to establish their business in Bermuda. However, Omega Dark, the country’s first cryptocurrency exchange, was only incorporated there last week.
In 2018, the Bermuda government announced that was planning to make amendments to its Banking Act so that a new class of banks could be created to provide services to local Blockchain and cryptocurrency organizations. Premier Burt stated that the fact that traditional banks could not provide services to such companies should not be allowed to stop the growth of the industry.
Premier Burt stated that while they wanted to attract more businesses in the sector, companies would need to pass extremely stringent tests so that disasters such as the one at QuadrigaCX did not occur.
He stated that any damage to the country’s reputation due to scams or other scandals could hurt their traditional financial services industry, which was why they were so strict about who the country allows to set up shop in Bermuda.